How to write an employment contract

Q: Do I need to write and sign a written contract with my employees?

A: It is generally not required, but it is highly recommended that all agreements with your employees be put in writing. Note that contracts with domestic helpers are required to be put in writing.

Q: What do I need to include in an employment contract?

A: You should include the following:

i. Basic information of the employer and employee including name, address, contact information; ii. Job title and related information including a basic job description, hours of work, rest time, allowed leaves, place of work and name of the supervisor; iii. Specific description of all compensation and benefits; iv. Guidelines and limitations; v. Intellectual Property and confidentiality clauses; vi. Type of employment (probationary/regular/fixed term/others)

Q: I don’t have any written contracts yet with my employees but they are requesting to take a leave of absence, how should I be guided on how many leaves to allow.

A: The law requires a minimum no. of 5 days service incentive leave but you can allow more. It’s common in the Philippines for employers to provide 15 days of paid leave (vacation) and 15 days of sick leave for highly valued employees.

Q: Am I also required to provide sick leave?

A: No. There is no requirement to provide paid sick leave. However, employees may use their service incentive leave when sick. Note that there are benefits provided by the SSS with regard to employees that are sick. While a written contract of employment isn’t required by Philippine Law, membership with the SSS is required.

Q: What other government benefits are required by law?

A: Registration with Pag-Ibig and Philhealth is also required by law. Some employers provide more than the minimum employees contributions. You may consider including such benefits (above the minimum contribution) in the written contract.

Q: What other benefits am I required by law to provide?

A: Some other benefits required by law are:

i. 13th month pay. Whether you state it or not, employees in the Philippines are entitled to a mandatory 13th month pay. While strictly speaking, 13th month pay doesn’t cover all kinds of employees, note that it is traditionally provided to all employees. Some employers also choose to be more conservative with basic pay, while providing more than just 13th month pay (i.e. 14th mo, 15th mo, etc.). Note that even if you do not include any provision on 13th month pay, it will be considered as written into the contract. However, in absence of any other provision on bonus, you will only be required to provide the 13th month pay and nothing more. ii. Other leaves. Employees are also entitled to a. Maternity Leave; b. Paternity Leave; c. Solo Parent Leave; d. Women’s leaves under the Magna Carta for Women.

For more information on leaves, you may read our FAQ on leaves.

iii. Higher Pay on Regular and special holidays iv. Night Shift Differential

Q: Do I need to include grounds for termination?

A: The law provides for a list of grounds for termination. There is no need to include these in the contract.

Q: Is there a specific form required by law?

A: No. For new businesses, we often suggest utilizing a letter style format with a space below for the conformity of the employee.